Supply and Demand Zones
Supply and demand are the very determinants of price – any price. This applies to everything from your local farmers market, to a rare, one of a kind jewel, to the foreign exchange market. Traders that understand the dynamics of demand and supply are better equipped to understand current and future price movements in the forex market.
What are Supply and Demand Zones
So, what exactly is a supply zone and a demand zone?
This would be best described by a chart:
In the image above you see the German stock market DAX. The red zone is marked as a supply zone. This could also be defined as an active resistance level or a place where traders are selling huge amounts.
These levels are broader than a resistance line. They are very similar to resistance zones.
On the other side, a Demand zone is a broad area of support, just like the image below.
In the chart above you can see a supply zone or in other words an extensive support level. It is also a level concentrated in buyers. As you can see every time price approaches the supply zone it quickly jumps back up.
Another characteristic of supply and demand zones is the quick price action. As pointed out above, price action is very fast around those levels, so if there are opportunities they are quickly absorbed.
Subscribe to our website
Get update & latest blog post
Neither PriceAction Forex nor priceactionforexltd.com, LTD (publisher of PriceAction Forex) is registered as an investment adviser nor a broker/dealer with either the U. S. Securities & Exchange Commission or any state securities regulatory authority. Users of this website are advised that all information presented on this website is solely for informational purposes, is not intended to be used as a personalized investment recommendation, and is not attuned to any specific portfolio or to any user’s particular investment needs or objectives. Past performance is NOT indicative of future results. Furthermore, such information is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All users of this website must determine for themselves what specific investments to make or not make and are urged to consult with their own independent financial advisors with respect to any investment decision. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. All opinions, analyses and information included on this website are based on sources believed to be reliable and written in good faith, but should be independently verified, and no representation or warranty of any kind, express or implied, is made, including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we undertake no responsibility to notify such opinions, analyses or information or to keep such opinions, analyses or information current. Also be aware that owners, employees and writers of and for priceactionforexltd.com, LTD may have long or short positions in securities that may be discussed on this website or newsletter. Past results are not indicative of future profits. This table is accurate, though not every trade is represented. Profits and losses reported are actual figures from the portfolios PriceAction Forex managed on behalf of priceactionforexltd.com, LTD.